Chevron Lobbied For Corporate Sovereignty Rights In TAFTA/TTIP To Act As 'Environmental Deterrent'

from the they're-not-even-trying-to-hide-it-anymore dept

Back in 2014, Techdirt noted that arguably the most serious problem with corporate sovereignty was not the huge awards that could be imposed on countries, but the chilling effect the mere threat of those awards could have on national sovereignty. In that post, we quoted from a remarkable 2001 article in The Nation. A former Canadian government official in Ottawa revealed that numerous proposals for new environmental regulations had been dropped in the face of threats that NAFTA's investor-state dispute settlement (ISDS) framework would be used against Canada if it brought in new laws. The Techdirt post also mentioned a case in Indonesia, where a mining company dropped a corporate sovereignty case when it was offered "special exemptions" from a new mining law.

More recently, we've seen New Zealand put on hold its plans to require plain packaging for cigarettes, as a result of Philip Morris bringing an ISDS claim against the Australian government for doing the same. The New Zealand government was concerned it too might get hit, and so decided to wait. Now that the Australian case has been thrown out, New Zealand is pressing ahead with its plain packs legislation.

The chilling effects of corporate sovereignty are now so well established that companies are even beginning to cite them as a reason for including it in trade deals. The minutes of a meeting that took place between European Commission officials, and Chevron executives, obtained by The Guardian, make that plain:

"ISDS has only been used once by Chevron, in its litigation against Ecuador," say the minutes of a meeting in April 2014 between unnamed Chevron executives and European commission officials, which the Guardian obtained under access to documents laws. "Yet, Chevron argues that the mere existence of ISDS is important as it acts as a deterrent."

Chevron is talking about the multi-billion dollar award made against Ecuador in one of the longest-running and most complex disputes involving corporate sovereignty. When contacted by The Guardian, Chevron repeated its claim that ISDS was a really great weapon to wield against countries, although naturally it expressed that view in somewhat different language:

ISDS serves a useful function of encouraging investors and host states to negotiate in good faith in order to avoid escalation of disagreements that occasionally arise.

Aside from confirming people's worst fears about the chilling effects of corporate sovereignty, Chevron's candid admission that it wants ISDS in TAFTA/TTIP as a "deterrent" reveals something else. It shows that corporations not only demand a unique privilege to circumvent national legal systems using secret tribunals composed of corporate lawyers, but are now trying to craft yet another "right": to deploy routinely the mere threat of ISDS as a "deterrent" to government action. Or, as you and I would put it, the right to engage in raw, brutal bullying on a global scale.

Reader Comments

Chevron not the problem

The corporations aren't the problem here - they're actually acting exactly as you'd expect. The problem is the cosy welcome they get from those who are supposed to be looking after the public's interest.

It's unclear to me how our public officials could ever think these clauses benefit the people they are supposed to represent.

Re: Chevron not the problem

It's unclear to me how our public officials could ever think these clauses benefit the people they are supposed to represent.

They benefit rich corporations. There are hopes for trickle-down effects.

If you believe in capitalism, you believe in this being beneficial for everyone.

And good old Mammon has a whole lot more smiting force at his disposal than all older deities combined, so sacrificing your other beliefs at its altar is a lot more likely to earn you goodwill and prosperity than anywhere else. Look at the pitiful riches Job (not Jobs) got as his ultimate rewards for his faith and steadfastness. Then compare with the recent market valuation fluctuations of Apple. Not the apple from the forbidden tree: we are talking about quite unoriginal sin here.

Nobel had no clue what he was dealing with when he thought he could finally satiate War's hunger.

So?

I am getting sick of the articles lining out terrible and bad consequences of ISDS as if they were some bad side effects one should take into account.

News flash: they may be bad, they may be horrific, but they most definitely aren't side effects. They are the openly stated main effect of those agreements. It's not an unfortunate exception when corporate interests trump the law. It is the whole point.

The purpose is stated clear enough, and the way the tribunals are constituted is perfectly in line with that.

There is no sugar-coating here. It's rather: "this is the pill we want you to swallow. This is a crowbar. If you think of calling your law makers, we can save you the trouble. They are right here in our pocket. Gee, that's a fine economy you have there. Wouldn't want to have anything bad happen to it, would you?"

Of course there are horror stories involved here. And of course they are used for "deterrence". That's how organized crime rolls. If they had to follow through on their threats every time without anybody caving, they would not last long.

pre cognitive transplanted endowment

I'm not a fan of ISDS, but...

The reason we don't want ISDS in our trade agreements is that we don't want to give up our government's ability to change economic conditions in our country to the perceived detriment of foreign investors.

That said, if the purpose of a trade agreement is to encourage foreign investment, restrictions on what a country can do to make itself less attractive to foreign investment are reasonably part of the negotiation.

ISDS as a concept at least originally had "banana republics" in mind, places where the country might up and expropriate everything tomorrow and owns the courts so there's no recourse there. Of course, since you can't just say in a bilateral trade agreement, "this is only for you countries run by dictators or populist autocrats with limited rule of law," it got applied to everyone. And then it got bigger.

Re: I'm not a fan of ISDS, but...

ISDS as a concept at least originally had "banana republics" in mind, places where the country might up and expropriate everything tomorrow and owns the courts so there's no recourse there. Of course, since you can't just say in a bilateral trade agreement, "this is only for you countries run by dictators or populist autocrats with limited rule of law," it got applied to everyone. And then it got bigger.

Hogwash. "countries run by dictators or populist autocrats" will not heed trade agreements either. And of course, the notion that one wants to encourage heavy investments into countries run by dictators or populist autocrats because one hopes to increase one's own gains by 1% over the course of 10 years due to being able to ride on their exploitative behavior towards their own populace: that's disgusting on its own.

So basically you say that ISDS was designed to exploit the situation of the populace in dictatorships for some slim own personal gains, "and then it got bigger".

How much bigger does it need to get before anybody starts getting ashamed?

Re: I'm not a fan of ISDS, but...

"ISDS as a concept at least originally had "banana republics" in mind, places where the country might up and expropriate everything tomorrow and owns the courts so there's no recourse there."

And even in that limited context, it's a terrible, terrible idea that is utterly without merit.

If a country is so unstable that outside investors might find their investments expropriated, then outside investors will simply not invest. If that isn't enough incentive for a nation to behave better, then they don't get outside investors who aren't willing to risk a complete loss.

Re: Re: I'm not a fan of ISDS, but...

Not only that, but if a country is not willing to honour their trade contracts with corporations, why would they suddenly do an about-face and live up to the trade agreement? They've already eaten the carrot, and the stick is only effective if they place themselves in front of it.

Fear the zookeeper, not the lions

The ISDS is nothing but the result of Corporations doing what is in their best interest, and it coming to full fruition. The failure is that it was allowed to happen and fully supported by the Legislature that should have reigned it in.When you go to a zoo, you already know the lions are deadly, right? You don't trust the lions not to eat you, you trust the zookeeper to have the proper controls in place so that you are not endangered. Well, with ISDS, the lions paid off the zookeepers to unlock the gates and give all the humans a free weekend pass inwards. Blame the lawmakers for not reigning in ISDS, not the outstretched hands of the corporations - you know what they want, and will always want. It's not the corporations' job to protect the citizens. What the hell do we have a government for, otherwise?

Re: Fear the zookeeper, not the lions

There's the problem. Corporations are like kids throwing tantrums to get what they want: power without responsibility. Well I say if they can't or won't take responsibility, they can't have power, end of discussion.

"International terrorism" means activities with the following three characteristics:

Involve violent acts or acts dangerous to human life that violate federal or state law;Appear to be intended (i) to intimidate or coerce a civilian population; (ii) to influence the policy of a government by intimidation or coercion; or (iii) to affect the conduct of a government by mass destruction, assassination, or kidnapping; andOccur primarily outside the territorial jurisdiction of the U.S., or transcend national boundaries in terms of the means by which they are accomplished, the persons they appear intended to intimidate or coerce, or the locale in which their perpetrators operate or seek asylum.*

"Domestic terrorism" means activities with the following three characteristics:

Involve acts dangerous to human life that violate federal or state law;Appear intended (i) to intimidate or coerce a civilian population; (ii) to influence the policy of a government by intimidation or coercion; or (iii) to affect the conduct of a government by mass destruction, assassination. or kidnapping; andOccur primarily within the territorial jurisdiction of the U.S.

That seems pretty close to the aim of ISDS. Maybe companies bringing ISDS actions should be treated as terrorist organizations.

Is the issue totally one-sided or just mostly one-sided?

There's a lot of outrage here because it's Chevron and blah-blah-environment. I get that and it's understandable that people want governments to be able to protect the environment.

But, a central point of the article is that ISDS sometimes discourages legislatures and regulatory bodies from taking actions that they know will provoke ISDS lawsuits. In other words, they won't be as tempted to write certain laws and so on if they know an ISDS suit may conclude they have gone too far. (Keep in mind that it's far from a foregone conclusion that an ISDS suit will be successful.) My question is: Is that always such a bad thing? What if Apple had been able to sue the FBI over its attempted use of the All Writs Act? What if the next time Congress considers a law like SOPA/PIPA, they have to worry that Google is going to sue the crap out of whatever agency tries to enforce it? In other words, what if the potential for such a suit makes Congress hesitate before it passes the next marginal law?

(Of course, I understand that in most cases the disincentive is very limited because the legislators and bureaucrats don't personally pay for anything they do that exposes this or that agency to ISDS liability.)

BTW, this isn't some general defense of ISDS; like any legal mechanism, it will be abused. But, it's worth keeping in mind that (popular or not) government actions aren't always right and that it isn't necessarily a bad thing when it has to consider consequences of those actions, even when the actions purport to affect an unpopular target, like a corporation.

Re: Is the issue totally one-sided or just mostly one-sided?

BTW, this isn't some general defense of ISDS; like any legal mechanism, it will be abused. But, it's worth keeping in mind that (popular or not) government actions aren't always right and that it isn't necessarily a bad thing when it has to consider consequences of those actions, even when the actions purport to affect an unpopular target, like a corporation.

I can't wait until some Saudi electronics company sues the U.S. for damages because they cannot have Tim Cook flogged and executed for homosexuality in the U.S. like their laws at home demand.

Or sue for the distraction of their work force because of all the unveiled women the U.S. permits running around the streets. And not just running, but also driving.

Re: Is the issue totally one-sided or just mostly one-sided?

"In other words, they won't be as tempted to write certain laws and so on if they know an ISDS suit may conclude they have gone too far."

Only gone too far for the psychopathic money making Corporations who only gives a toss about how much money they can make for their owners. Bugger the rest of the community, society, country or the world. Just keep making laws for one-eyed greedy Corporations at the expense of the rest of us.

Not the place.

Deals like these should be worked out on a case by case basis between the company investing and the country seeking that investment. (Business Contract)

Placing it in a trade agreement only serves to tie the hand's of one side by limiting there ability to negotiate in their own interest. Yet one more way that the interest of the people have been gifted to corporations by are elected representative's.